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For us, the term crowdfunding is synonymous with community funding, because our TWIKE community is one of the most important pillars of our development. We also consider the principle of advance payment for a TWIKE to be community funding.
What was the main reason that prompted your company to choose crowdfunding as a financing method for your business?
- The first customers approached us and immediately offered to pay in advance for our vehicle, which was still in development. This experience raised awareness of funding by a community that benefits from the product. The elimination of the cost-driving banking level and the direct involvement of many investors in public relations work were the deciding factors.
How has crowdfunding financing proven itself for your company compared to traditional financing methods such as angel investors or bank loans?
- Compared to bank loans, crowdfunding is less anonymous and more direct. During our few contacts with the bank, the contact person often changed. You never got to know the decision-maker in the second row. Thanks to its directness and transparency, crowdfunding is a more stable source of financing for us than a bank loan.
What advantages do you see in using crowdfunding compared to traditional financing methods? (e.g., flexibility, brand building, lower costs)
- We see the main advantage of crowdfunding for us in the stability of financing. Unlike a bank loan, financial indicators or personnel changes at the bank will not call the financing into question. The crowd has a certain collective intelligence and assesses the project to be financed using softer factors than the potentially entrenched controller of a bank. While collateral and historical figures are important to banks, the crowd looks at opportunities and prospects, demonstrating an instinct for what might be successful on the market and what might not.
What specific challenges or risks are associated with crowdfunding which
you have not seen with traditional financing methods?
- To protect small investors, crowdfunding in Germany must meet certain criteria, compliance with which is monitored by BaFin (the German Federal Financial Supervisory Authority). The fulfillment of these and the public relations work requires the involvement of experienced service providers, which are not required for a bank loan. The preparations for this are time-consuming – and more costly than for a meeting with a bank. Similarly, the total amount of funds raised cannot be clearly planned in advance. Although targets can be set and written down, whether they are achieved depends on the crowd and your own public relations work.
How would you rate the efficiency and speed of fundraising through crowdfunding compared to other methods?
- Crowdfunding requires a longer and more intensive preparation phase. Furthermore, capital inflows do not simply happen overnight. However, the longer phase is also already in an early phase effective in terms of publicity and a9> so valuable for marketing and brand awareness.
How has crowdfunding influenced your company’s growth and strategic planning compared to traditional financing methods?
- The investor may already be a customer in our business model. A customer may become an investor. Crowdfunding thus forces more transparent planning and communication, which is beneficial for an honest product with good intentions.
Have you found that crowdfunding has helped reduce risk or dependence on a single source of investment?
- Yes, in our estimation, crowdfunding allowed us to diversify our dependencies and thus greatly reduce the risk of failure.
How has the use of crowdfunding affected your corporate structure, your business model or your long-term financing strategy in comparison to traditional
financing methods?
- The crowdfunding and the resulting funding has fundamentally made it possible implementing a development that, which would otherwise be impossible for an SME (small business) to achieve. Also in the long term we would like to ensure the continued growth of our company at an early stage our customers financially involve and them thereby also benefit from.
What advice would you give to other startups that have to choose between crowdfunding and traditional financing methods?
- The process of preparing a crowdfunding campaign (business plan, coordination with professional stakeholders, communication, etc.) is valuable in itself. In this respect, it is advisable to focus primarily on crowdfunding in order to be able to negotiate and agree on traditional bank financing if there are good reasons for doing so and you are well prepared.
